EUR/USD Week of June 24, 2012

EURUSD-Jun-24-2012-355x239

EUR/USD Weekly Close: 1.2570
Daily High/Lows:

Fri Jun 22 1.2484/1.2520
Thu Jun 21 1.2708/1.2532
Wed Jun 20 1.2744/1.2638
Tue Jun 19 1.2731/1.2569

Pivots: S3: 1.2464; S2: 1.2492; S1: 1.2528; P: 1.2556; R1: 1.2592; R2: 1.2620; R3: 1.2656

EUR/USD: Risk aversion continued to be the theme last week, as the market reaction to the FOMC took precedence over European news. Even though news about Spain was better than the market was expecting, risk appetite continued to remain weak. This was fueled by the FOMC meeting decision to extend Operation Twist through the year-end. , rather than introduce additional easing via QE3. So, the market took this opportunity to sell equities, gold, and buy dollars. Asia opened up with a slightly stronger dollar against the EURO, the focus of the Weekly Forex Play. What happens the coming week depends upon the ability of the EUR/USD to hold certain levels. Let’s analyze. From the 1.2744 high on June 20th, the EUR/USD traded down to a low of 1.2520 on June 22nd. A break of this level will likely yield a test of 1.2436 followed by the Weekly and Monthly lows at 1.2288. However, barring a significant break below 1.2520, the market will likely retrace the last swing move down (see far left box with Fibonacci retracement levels of 1.2572, (23.6%), 1.2605 (38.2%), 1.2632 (50%), and 1.2658 (61.8%)). On the topside, as long as we stay below 1.2744, the market has a better chance of moving lower after a retracement just based on the technical patterns and current Elliott Wave count. Think of the market being range bound between 1.2520 and 1.2744 until a breakout or breakdown. The preferred move is lower after a retracement of the last swing move.
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Jody Samuels, Currency Trader and Coach

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